Countries Push to Save Pacific Rim Trade Deal After US Exits TPP

Share this:

US former President Barack Obama, centre, takes part in the Trans-Pacific Partnership meeting at the APEC summit in Yokohama, Japan. Credit: AP Photo/Charles Dharapak/File)

Sydney: Several countries expressed hope Tuesday that the Trans-Pacific Partnership (TPP) could be salvaged, after President Donald Trump’s decision on a US withdrawal from the trade pact left its future in serious jeopardy.

Australian Prime Minister Malcolm Turnbull acknowledged Trump’s move was a massive blow to the 12-nation agreement, but suggested other countries, such as China, may help fill the void left by the US.

“Losing the US from the TPP is a big loss, there is no question about that,” Turnbull told reporters. “But we are not about to walk away from our commitment to Australian jobs.”

As expected, Trump used one of his first actions in office to officially abandon the trade deal on Monday, dubbing it a detriment to US businesses. He favours one-on-one agreements with other nations over multilateral pacts.

Leaders of some of the 11 other nations involved in the initiative earlier said they would move forward with the agreement in some form, with or without the US.

Turnbull said he had discussed the pact’s future recently with the prime ministers of Japan, Singapore and New Zealand, all TPP members, and believed the pact could survive without the US.

Other TPP members are Canada, Mexico, Chile, Peru, Vietnam, Malaysia and Brunei.

“All of us are working to see how we can ensure we maintain this momentum toward open markets and free trade,” Turnbull said. “Believe me, protectionism is not a ladder to get you out of the low growth trap. It is a shovel to dig it deeper.”

The US about-face on the deal is a setback for leaders of other TPP countries who invested political capital in fighting to get it ratified.

That includes Japan’s Prime Minister Shinzo Abe, who told lawmakers during parliamentary debate that he hoped to gain Trump’s “understanding” on the TPP’s importance. Abe has said he hopes to meet with Trump as soon as possible.

Japan completed the TPP ratification process last week, well aware Trump planned to drop out. Abe said its goals were still important for Japan and the TPP could be a model for trade deals with other nations, including those in Europe.

Malaysia’s second trade minister Ong Ka Chuan said that the remaining 11 TPP members will meet to discuss the next steps.

“Twelve countries signed the (TPP), but now one wants out. The other 11 can continue by making change to the clauses. There are many possibilities that these 11 countries can still proceed with,” the Bernama news agency quoted him as saying. He didn’t elaborate.

Turnbull said that in theory China could join the pact following the US departure. But that would require a revamp of the deal. In its current form, the TPP can only take effect after it is ratified by six countries that account for 85% of its members’ combined gross domestic product. The US made up 60% of the TPP’s combined GDP, so it could not be implemented as it stands now.

Though he didn’t suggest Trump himself would reverse his position, Turnbull did say the US eventually might.

“You have to recognise that his secretary of state, Rex Tillerson, has been a longtime advocate for it,” Turnbull said, referring to Trump’s nominee. “The Republican Party in the congress have been strong supporters of the TPP. It is possible that US policy could change over time on this, as it has done on other trade deals.”

New Zealand Prime Minister Bill English showed little enthusiasm for a “one-on-one” bilateral trade deal with the US.

“If you ask me today, I’d say there’s a pretty low chance of that happening in a form that we’d find satisfactory,” English told reporters in Wellington. “But we wouldn’t want to rule it out, any more than we’d want to rule out other versions of progress on free trade, with TPP or not.”

English said he agrees with his predecessor John Key’s view that the US risks ceding some influence to China in the Pacific without the TPP.

“That’s why I’ve indicated we’d be interested in preserving the option or of finding other ways of encouraging the engagement of the US in the Asia-Pacific,” English said.

Although losing the US as part of the pact means losing nearly two-thirds of its market, English said the initiative was still advantageous for New Zealand and therefore worth pursuing.

Whatever the deal’s fate, the region shows no sign of retreating from the market-opening trend that helped transform its many developing nations into a relatively stable zone of affluent, middle-income economies.

The greater concern is the uncertainty generated by Trump’s threats to impose tariffs of up to 45% on some imports. The US is the largest single market for China and Japan, and indirectly a huge source of demand for many of the commodities and goods produced across the region.

Closing US doors to trade may well backfire, said Ong.

“The US was the one encouraging free trade,” Ong said. “Suddenly, it is now trying to stop it. There’s a possibility this would trigger retaliation by a number of other countries.”

Twitter

Acknowledgment

The Independent and Public Spirited Media Foundation has provided financial support to the Foundation for Independent Journalism (FIJ) for the purpose of reporting and publishing stories of public interest. IPSMF does not take any legal or moral responsibility whatsoever for the content published by FIJ on their website thewire.in or on any of its other platforms.